Tran & Anor v Younis

LEGISLATION CITED: Motor Accidents Compensation Act 1999

Graham v Baker (1961) 106 CLR 340 Leichhardt Municipal Council v Montgomery [2005] NSWCA 432 CASES CITED: Leichhardt Municipal Council v Serratore [2005] NSWCA 406 Medlin v The State Government Insurance Commission (1995) 182 CLR 1 State of New South Wales v Moss (2000) 54 NSWLR 536 The Nominal Defendant v Lane [2004] NSWCA 405

Con Thanh Tran (First Appellant) PARTIES: Ha Dang Quach (Second Appellant) John Sarkis Younis (Respondent)

COUNSEL: P R Garling SC/P O/Connor/A Ryan (Appellants) D J Russell SC/P Dooley (Respondent)

SOLICITORS: Holman Webb (Appellants) Ray Wehbe & Co (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40172 of 2005

HANDLEY JA HISLOP J

14 JULY 2006 CON THANH TRAN & ANOR v JOHN SARKIS YOUNIS CATCHWORDS

DAMAGES - appeal - reassessment - no question of principle

DAMAGES - motor accidents - Motor Accidents Compensation Act 1999 s 126 - most likely future circumstances - multiple findings permissible FACTS

The appeal challenged an award of $250,000 for future economic loss. The trial Judge found that the plaintiff was capable of re-entering the workforce and gaining employment albeit with a reduced capacity. The Judge noted the defendants' failure to lead any evidence as to the availability of suitable work for the plaintiff. HELD: (1) The Judge erred in treating the defendant as having an onus of leading evidence as to the availability of work for the plaintiff as injured; (2) Damages are awarded for loss of earning capacity not earnings as such but an award is only made where the diminution in earning capacity is or may be productive of financial loss: Medlin v The State Government Insurance Commission (1995) 182 CLR 1, 16; Graham v Baker (1961) 106 CLR 340, 347; (3) The Judge's calculation of future economic loss was inconsistent with his findings as to the plaintiff's residual capacity for work; (4) The Court had to intervene and reassess in accordance with s 126 of the Motor Accidents Compensation Act 1999 and The Nominal Defendant v Lane [2004] NSWCA 405, paras [64]-[67]; (5) There being no specific evidence as to the plaintiff's probable future earnings uninjured, the Judge was entitled to adopt the average weekly earnings in the relevant occupation as a guide. ORDERS

2. Set aside the judgment in the District Court for $526,255.85 and substitute a judgment for the plaintiff for $382,505.85 with effect from 24 February 2005.

3. If consent orders dealing with costs are not filed in the submissions box on level 12 within 14 days the appellant is to file and serve written submissions directed to the issue of costs within a further 7 days. The respondent is to file and serve written submissions dealing with costs within a further 7 days.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40172 of 2005

HANDLEY JA HISLOP J

14 JULY 2006 CON THANH TRAN & ANOR v JOHN SARKIS YOUNIS Judgment 1 HANDLEY JA: This appeal arises out of a head on collision between the plaintiff's and the defendants' vehicles on 29 July 2000 in which the plaintiff was seriously injured. When the plaintiff sued for damages the defendants did not contest liability and the action proceeded as an assessment only before Delaney DCJ who gave judgment for $526,255.85. The defendants' appeal only challenges the award of $250,000 for future economic loss. 2 The Judge found that although the plaintiff tended to overstate the effects of his disabilities and the impact they have had on his life he did have permanent physical and psychological problems. He accepted the evidence, in report form, of Dr Donaldson and Associate Professor Jones who had been qualified for the defendants. Dr Donaldson considered that the plaintiff could perform managerial or supervisory work but was unable to do heavy labouring work in the building industry as he had done before the accident. The Judge quoted Associate Professor Jones who said: "It would be inadvisable for him to undertake heavy labouring on the basis of the right hip, although he should be capable of performing many activities of daily living on the proviso that the right hip replacement is firmly located and functioning normally. He does have vocational potential and I believe that his skills in the building industry will allow him entrepreneurial activities in the building construction industry. There may be possibilities of developing his own property and he could work as a building supervisor." 3 The Judge found that the plaintiff has a permanent disability in his right hip, damage to his teeth, a soft tissue injury to his spine and a number of psychological problems explained in the report of Dr Robertson. He concluded: "… the plaintiff had significantly overstated the effect of the admittedly serious injuries upon him and I have difficulty accepting the degree to which he has said that he has been affected, particularly in terms of his daily activities and also in respect of his employment. In my opinion he has a wide range of usable skills but although it is clear that he could not continue working on the tools as a builder, there are many other avenues that he could have pursued which he has not." 4 The Judge said that there were difficulties in assessing the plaintiff's past economic loss because he had structured his affairs to minimise his liability to income tax and for some time had been building a home on his property at Box Hill and working part-time in the family take away food store. He said that if the plaintiff had not been injured it was not likely that he would have worked as an employee in the building industry between the accident and the trial and he "cannot recover more for past earning loss than he would have expected to have earned had he not been injured". He assessed this on the basis of an average loss of $150 per week. 5 When he turned to consider the plaintiff's future economic loss he repeated his earlier finding that he could not work as a builder on the tools because of the injuries to his right hip. He did not find that the plaintiff's psychological injuries prevented him from working. The Judge said: "Uninjured, he would more likely than not have continued as he had before the accident being involved in building and developing and such other interests as his family trust acquired, or he would have obtained work as a builder from time to time." 6 The Judge found that the plaintiff had a residual capacity for sedentary work and some building and supervisory work, to organise trades and equipment, and to work as a supervisor (para [42(d)]). He then said that the defendant "did not … lead any evidence as to the availability of such work and the value of the residual earning capacity it could create for the plaintiff". The plaintiff led no such evidence either. The plaintiff has the legal onus of proof on such matters and the defendant does not even have an evidential onus unless prima facie evidence has been called for the plaintiff: Luntz "Assessment of Damages for Personal Injury and Death" 4th ed, 2002, 114-115; State of New South Wales v Moss (2000) 54 NSWLR 536, 552, 553, 561 (Moss) per Heydon JA. 7 The Judge fell into error in treating the defendant as having an onus of leading evidence on this issue. However the general principle is that applied in Moss (above) namely that where earning capacity has unquestionably been reduced, but its extent is difficult to assess, the Court must assess the plaintiff's loss even though precise evidence has not been tendered to establish the loss. 8 The Judge was satisfied that the plaintiff would re-enter the workforce as a self-employed man or as an employee. There was evidence that an employee in the building industry was earning an average of $793 net per week at the date of trial. The Judge assessed the value of the plaintiff's lost capacity at $500 net per week which represented 63% of his capacity uninjured. Because of the likelihood that the plaintiff would not work from time to time the Judge increased the allowance for vicissitudes to 20%. 9 Mr Garling SC for the appellant submitted that this award was inconsistent with the award for past economic loss based on an average loss of $150 per week, inconsistent with the Judge's findings as to the extent of the plaintiff's retained earning capacity, and it did not comply with the mandatory requirements of s 126 of the Motor Accidents Compensation Act 1999. 10 The award for past economic loss reflected the Judge's assessment of the plaintiff's retained earning capacity and also the extent to which, but for his injuries, he would have exploited it to earn income. It was an average over the 4½ years between the accident and the trial which included periods after the accident and his major hip surgery on 2 December 2002 when he was totally incapacitated. The award, as an average, presupposes a loss at other times which was less than $150 per week. 11 The contrast between the two awards is startling but although the award for the past is not challenged, it cannot, without more, establish error in the other award. Damages are awarded for loss of earning capacity, not loss of earnings as such: Medlin v The State Government Insurance Commission (1995) 182 CLR 1, 16; but only if "the diminution of his earning capacity is or may be productive of financial loss": Graham v Baker (1961) 106 CLR 340, 347. Although there is some tension between these principles, this Court must be guided by the statement of McHugh J in Medlin at 16: "Earning capacity is an intangible asset. Its value depends on what it is capable of producing. Earnings are evidence of the value of earning capacity but they are not synonymous with its value. When loss of earnings rather than loss of capacity to earn is the criterion, the natural tendency is to compare the plaintiff's pre-accident and post-accident earnings. This sometimes means that no attention is paid to that part of the plaintiff's capacity to earn that was not exploited before the accident. Further, there is a tendency to assume that if pre-accident and post-accident incomes are comparable, no loss has occurred." 12 The Court is in a better position to determine the extent to which a loss of earning capacity "is or may be productive of financial loss" when considering the closed period between accident and trial. The pre-injury earnings will often indicate the likely earnings, and hence the loss, during this relatively short period even if the injured person had not fully exploited his earning capacity in the past. 13 In this case economic loss had to be awarded for a period of 18 years in the future to age 65. A loss of earning capacity which had not been fully exploited in the past becomes more significant when considering the plaintiff's loss over such a period. 14 In these circumstances the Court should focus on the Judge's findings as to the plaintiff's retained capacity. A loss of capacity of 63%, which was the basis of this award, is inconsistent with the Judge's findings based on his acceptance of the evidence of Dr Donaldson and Associate Professor Jones. Mr Russell SC for the respondent sought to rely on the evidence of Dr Robertson, the psychiatrist, who considered that the plaintiff was not fit for any gainful employment. The Judge did not accept this evidence. He said para [31] that the plaintiff had a number of psychological problems explained in Dr Robertson's report, and he took into account the psychological profile it contained when assessing non-economic loss (para [33]). 15 Dr Robertson's report of 15 October 2004 had to be, and was, based on the plaintiff's history of his symptoms and problems. He recommended (blue 51 L-N) that the plaintiff undergo neuropsychological testing of cognitive function to confirm the presence of significant cognitive impairment and to quantify its extent. If that investigation was undertaken he asked if he could be sent a copy of the test results so that he could provide a supplementary report. There is no evidence that this testing ever took place or that the follow up report envisaged by Dr Robertson was obtained. If such a report was obtained it has been withheld. 16 The weight to be given to Dr Robertson's report was substantially diminished by the Judge's findings about the reliability of the plaintiff's evidence (para [11], [39]). Counsel who appeared for the plaintiff at the trial submitted that he had no currently exercisable residual earning capacity (para [21]), a submission which could only be supported on the basis of Dr Robertson's evidence, but it is clear from the Judge's findings and awards that he rejected this submission. 17 In the light of those findings the award for future economic loss based on a loss of 63% of the plaintiff's pre-injury capacity cannot be supported and this Court must intervene and reassess. In doing so it must comply with s 126 as explained in The Nominal Defendant v Lane [2004] NSWCA 405 particularly at paras [64]-[67]. The section provides: "(1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury.

(2) When a court determines the amount of any such award of damages it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events concerned might have occurred but for the injury.

(3) If the court makes an award for future economic loss it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted." 18 The reasons for judgment of Giles JA in Lane establish that s 126 does not prohibit the Court from making more than one finding about the claimant's "most likely future circumstances but for the injury" (para [65]) which is not surprising given the use of the plural "circumstances". The Court there held that s 126(2) permitted both upward and downward adjustments, and an upward adjustment of $50,000 for the possibility, substantially less than 51%, that the plaintiff would advance from nursing assistant to enrolled nurse was held to be consistent with the section. The decisions in Leichhardt Municipal Council v Serratore [2005] NSWCA 406, and in Leichhardt Municipal Council v Montgomery [2005] NSWCA 432, on s 13 of the Civil Liability Act, which is in the same terms, take the analysis no further for present purposes. 19 In this case the trial Judge set out in para [42], as required by s 126, the assumptions he had made. The appellants' only challenges to those assumptions related to those in sub-paras (c) and (d). The challenge to the first assumption was that it was not more likely than not that, uninjured, the plaintiff would have obtained work from time to time as an employee in the building industry. However this was an alternate finding which followed a finding that he would have continued being involved in building, developing and other work for the family trust and himself. 20 In my judgment the Judge did not fall into error in making this assumption. In substance he found that the plaintiff would have exploited his skills in the building industry either on his own behalf or as an employee. Section 126 does not require the making of assumptions of great specificity and I see no reason why a general assumption such as that should not be made consistently with the section. The error in para (d) involving the reversal of the onus of proof has already been referred to. Subject to that qualification I would adopt the assumptions made by the Judge. 21 Between 1976 and 1978 the plaintiff completed most stages of an architectural drafting course at Granville TAFE, and in 1979 he undertook, but did not complete, a computer programming course at Sydney Technical College. Subsequently he had worked in the building industry for outside employers as an estimator, clerk of works, and he had also worked as a building insurance loss assessor (black 5). Between 1984 and 1988 he worked for his father who was then active in the industry. Later he worked in the industry on his own account or for his trust (black 6). This evidence fully supported the Judge's finding and assumption in sub-para (d) that the plaintiff had the capacity to do sedentary work and some building and supervisory work, to organise trades and equipment, and to work as a supervisor (para [42]). 22 In valuing the plaintiff's residual earning capacity for the future where specific evidence of its probable value had not been adduced the Judge was fully entitled to take the average of $793 per week net as a guide: see Moss (2000) 54 NSWLR 536, 540, 550, 560 where this Court held that a jury was entitled to award damages to a 24 year old woman, who had been badly injured at the age of 14, based on the average net wage of an adult female. 23 Doing the best I can, on the Judge's findings of fact, I would assess the plaintiff's loss at the date of trial at $200 per week or 25% of his capacity uninjured but would apply the normal figure of 15% for vicissitudes. The multiplier on the appropriate table for 18 years is $625 and this results in an award of $106,250 for future economic loss which I would substitute for the amount of $250,000 allowed by the Judge. 24 The parties joined in asking the Court to publish its reasons, and make orders other than orders for costs. I would therefore make the following orders:

(2) Set aside the judgment in the District Court for $526,255.85 and substitute a judgment for the plaintiff for $382,505.85 with effect from 24 February 2005.

(3) If consent orders dealing with costs are not filed in the submissions box on level 12 within 14 days the appellant is to file and serve written submissions directed to the issue of costs within a further 7 days. The respondent is to file and serve written submissions dealing with costs within a further 7 days. 25 HISLOP J: I agree with Handley JA. **********

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